Examination of witnesses
(Questions 20 - 39)
WEDNESDAY 9 DECEMBER 1998
THE RT
HON STEPHEN
BYERS, MP
and MS PATRICIA
HEWITT, MP
Joan Walley
20. But is there not some kind of an inconsistency
here? We have this Environmental Audit Select Committee, which
is here to look at environmental issues—issues of sustainability
right the way across Government—but it seems that by the
exclusion of the Deputy Prime Minister on the Committee from the
Treasury to deal with comprehensive spending, that somehow or
other there is not that same cross-departmental inclusion and
that he is excluded simply because as well as having responsibility
for sustainability, he actually heads a spending department. There
does not seem to be any consistency here.
(Mr Byers) I do not think that, for the simple
reason that whereas the Deputy Prime Minister leads on these matters,
he is not the only Minister who takes an interest in them or has
a responsibility in them.
21. Political leadership has to come from
the top downwards on this.
(Mr Byers) It does. It comes from the Prime Minister
and the Deputy Prime Minister, and ensuring that we look very
carefully at issues to do with sustainable development. I think
it can be done in ways other than having people as members of
a Cabinet Committee. There are many other ways that the issues,
in which this Committee is concerned about, can be addressed in
terms of following through from the Comprehensive Spending Review.
Mr Thomas
22. May I return to the Treasury's role
in the context of the Comprehensive Spending Review for delivering
environmental improvements. May I ask how you are going to audit
the money that you have agreed will be spent by the various Government
departments. May I quote to you the case of the Home Energy Efficiency
Scheme, which you have mentioned, which will achieve improved
warmth for households but is yet perhaps to deliver significant
energy savings. How are you going to make sure that the environmental
improvements that you claim are going to be delivered will actually
be achieved? What is the audit trail going to be?
(Mr Byers) I am not wanting to give this Committee
any extra work but shortly there will be published for each department
their Public Service Agreements. These will specify performance
targets and where they intend to spend the money; what they intend
to get from the extra money they have received from the Comprehensive
Spending Review. Once those Public Service Agreements are published,
then there will be an opportunity for all of us—it will
be done within Government through the PSX Committee, which has
been referred to—but the public will know exactly what the
agreement is. This is an agreement which is entered into by the
Treasury on behalf of the Government with individual departments.
So everybody with an interest will be able to call those departments
to account. We will be able to put to them the issue you have
just put to me. What are you doing in terms of the extra, the
£174 million, which is going on energy efficiency? How are
you spending it? Are you doing it in a way that is environmentally
sustainable?
23. So the PSX Committee will have that
specific wing to monitor its environmental impact, as well as
whether value for money is being achieved?
(Mr Byers) We will be monitoring the Public Service
Agreements, taking into account all of the issues which have been
touched on by Government, one of which is sustainable development.
24. Will you publish the conclusions, the
conclusions of the PSX Committee?
(Mr Byers) The actual decisions, as with all Government
decisions within Cabinet Committee, remain confidential; but when
we publish our White Paper on Public Service Agreements we will
be making it clear there that we will want to have a system whereby
we report on a regular basis, and that report will be made public
on progress, against the Public Service Agreements.
Mr Loughton
25. Just wrapping up the generality of this
Comprehensive Spending Review, you also had the luxury of not
being part of the Treasury team when the CSR was put together
so you can speak freely and off the record, I am sure; but do
you not think it was a mistake (and if you had been the author
of this document you would have done otherwise) that environmental
concerns are not mentioned in any detail, even in the overview
of the CSR document? Do you not think that was badly handled?
(Mr Byers) I do not for the simple reason that
I think, as a spending Minister in the Department of Education
and Employment, that the question of sustainable development was
taken into account. Many of the decisions that we were taking,
particularly in terms of the amount that we put into schools capital,
was done on the basis that this would be supportive of the Government's
general policy towards a sustainable development programme.
Chairman
26. Now we are talking about the Treasury,
you see. It is the Treasury itself where that sustainable development
would be at the core of economic policy making. Therefore, there
does seem to be some gap between that statement and the fact that
there is nothing in your overview of the Comprehensive Spending
Review about the environment at all. Secondly, you seem to have
delegated the actual consideration of these matters in departments—the
overview of that anyway—to the Deputy Prime Minister. That
is the gap which we are concerned about.
(Mr Byers) The distinction I would draw would
be between having, with respect, warm words and soundbites in
the overview, which is easily done—it is a few more words
in the printed document—and departments not doing anything
about it. What I know from my experience (and it is purely a personal
experience) as a Minister of a spending department carrying through
the Comprehensive Spending Review, is that we did take sustainable
development into account in bringing forward our proposals. I
am confident that this happened in departments across Whitehall.
I happen to think that this is a far better way of doing it. It
is really addressing the issue rather than just relying on words
in the White Paper.
Mrs Brinton
27. All that may be absolutely accurate
but certainly in modern day politics it is not just action, it
is also words if you are going to get the message across. I am
afraid if we, as an Environmental Audit Select Committee, have
not been able to see the words and therefore judge the commitment,
wherever does that leave the general public?
(Mr Byers) I am not sure how many members of the
general public read White Papers and I am particularly not sure
how many read the Comprehensive Spending Review. What I do know
is that many people are parents at schools and when they see the
tens of millions of pounds we are committing to schools capital,
which is being invested in a way which is energy efficient, that
will send over a far better message than a few words in a Government
White Paper.
Chairman: I think
we have comprehensively covered that matter.
Mr Savidge
28. Prior to the conclusion of the Comprehensive
Spending Review, the Chancellor said that departments would need
"to root out unjustified subsidies". You say that the
Comprehensive Spending Review looked in depth at the environmental
impact of three areas which were listed by the Panel as being
perverse subsidies: namely, financial assistance to agriculture,
energy, and transport. I wonder whether you concluded that these
were "unjustified subsidies" in the Chancellor's terms
and, if so, what plans you had to root them out.
(Mr Byers) In all three areas we have looked very
carefully at how we can tackle these. I would accept that in some
of these areas there are unfair subsidies. As far as agriculture
is concerned, as members of the Committee will know, we are not
free agents. We have to operate within the Common Agricultural
Policy. What we want to do—and this is part of the discussions
going on around Common Agricultural Policy reform—is to
ensure that we can move away from subsidies which are purely based
on production, to subsidies which are far more environmentally
supportive. It is one of the key objectives of this Government,
in our discussions in Europe to reform Common Agricultural Policy,
that we move in that particular direction. As far as energy is
concerned, there are one or two taxation matters which are touched
on in the Pre-Budget Report and particularly in the Marshall Report.
We have already mentioned the £174 million for a revised
Home Energy Efficiency Scheme. The Minister for Industry, with
responsibility for these matters, announced on 24 September the
fifth and largest non-fossil fuel order. As I mentioned, we are
also looking at how we can progress some of the recommendations
mentioned in the Marshall Report. On transport, which was the
third area, the Trunk Roads Review did assess proposals against
a range of criteria, including the impact on the environment.
It was largely as a result of this that we did scale back the
proposals contained within the previous Government's paper on
this matter. So we did look very carefully at it and we came forward
with some positive proposals as a result.
29. To root things out?
(Mr Byers) Yes.
30. Friends of the Earth, when they spoke
to the Committee, drew our attention to the very substantial cost
to future generations that would follow on from the nuclear energy
policy. I wonder to what extent the Comprehensive Spending Review
looked at the question of the hidden (or perhaps one should say)
the delayed liabilities of the nuclear industry and whether you
would regard that as being an unjustified subsidy.
(Mr Byers) I am not sure that this was a matter
which was specifically addressed in the CSR process. As members
of the Committee will know, it is an issue which is kept under
constant review by the various Government departments who have
an interest in that area.
31. I am not sure whether I am necessarily
fully clear from that, how far you have really looked at whether
it is an unjustified subsidy.
(Mr Byers) What I am saying is that in terms of
the Comprehensive Spending Review, it was not a matter which was
specifically addressed. Having said that, outside of the Comprehensive
Spending Review, as most members of the Committee will know, it
is an issue which is being looked at.
32. You said that the environmental implications
of other areas were also discussed. I wonder whether you could
indicate to us the nature and scope of those discussions. To take
a couple of examples. First of all, the environmental impact of
the requirement on the Forestry Commission to increase their rate
of return on their commercial enterprises. The second example:
to what extent the subsidy to the fishing industry could be seen
as something which might produce environmental harm. Obviously
it produces economic and social benefits.
(Mr Byers) On those, as far as the fishing industry
is concerned, we will see in the Public Service Agreement, which
is coming from the Ministry for Agriculture, Fisheries and Food,
that this will address a number of issues which will touch on
environmental concerns. It may be perhaps more appropriate to
look in detail at their proposals there. As far as forestry is
concerned, there will be a separate Public Service Agreement for
the Forestry Commission. They will have their own PSA. Without
giving away the details, because these will be released in the
White Paper shortly, members of this Committee will be quite pleased
that they do address specifically a number of environmental issues
in a very positive way. It may be that you will want to talk to
the Forestry Commission about the details in their PSA, but it
is one of the benefits of the individual PSAs for Agencies like
the Forestry Commission that they can come forward with positive
proposals for performance targets which they can be judged against.
Dr Iddon
33. May I turn to the aims and objectives
of departments, Minister. This Committee, when they looked at
them, noticed that for most departments environmental issues were
not included in their aims and objectives, and have been rather
critical of that. In your responses this morning—and indeed
in your memorandum that you put out—you thought that was
each department's responsibility. Then you published the Greening
Government document and in your response to that you implied that
the ENV Committee were going to address the issue and that Green
Ministers from those departments would think about rewording the
aims and objectives. We are rather anxious that this be done.
Therefore, I am asking you whether the involvement of the ENV
Committee means that aims and objectives of individual departments
will be rewritten. We are anxious that this should be done before
the Public Service Agreements are made.
(Mr Byers) Work has been going on precisely in
that area. When the Public Service Agreements are made public,
there will be revised aims and objectives for each department,
and there will be some Agencies like the Forestry Commission.
Members will see that there has been a significant increase in
references to sustainable development in those aims and objectives.
Mr Loughton
34. Minister, we were surprised to find
that neither the Treasury nor the DETR have accepted that the
greening of operations should be explicitly recognised alongside
their own efficiency and good employment practice in the various
departments' statements about how they deliver against their objectives.
Also, going back to what you said earlier. In the Comprehensive
Spending when it was presented, (if I remember correctly), because
it is a three-year review, there was very much the condition that
further lumps of money would be based on results. So one had that
big stick that if the education department, the schools did not
deliver the results, they would not get additional money for further
improvements, capital works or whatever. Attached to that certainly
would be a green condition as well. So should we interpret your
view to be that the Greening Government operations is not generally
a core factor in departments' activities?
(Mr Byers) No. I think that when members have
the opportunity of seeing the revised aims and objectives, they
will be able to see that departments have considered their approach
to the sustainable development issues and perhaps have acknowledged
that they may need to do more and certainly to reflect that in
their aims and objectives. On your first point about how the Comprehensive
Spending Review process will work over three years, it would be
a mistake to believe that somehow departments will be penalised
and punished and have money taken away from them if they fail
to meet their performance targets. Effectively, most of the performance
targets are to be achieved at the end of the CSR process anyway.
Because they are challenging and ambitious they will need the
full three years of the Comprehensive Spending Review period to
be achieved. What we will be looking for in the period over the
Comprehensive Spending Review is that we will be monitoring and
evaluating performance, and will be suggesting ways that if there
is a possibility that a department is falling behind as far as
a particular target is concerned, then without giving them any
extra money we will be suggesting ways in which they may be able
to improve their performance so that they can reach their target
at the end of that process. It is not a question of money being
taken away if they fail to reach the ambitious target that we
set for them, although it will clearly be a factor which the Government
will want to take into account when it decides the financial allocation
for the Comprehensive Spending Review 2. So that is the way in
which we intend it to operate in practice.
35. But there is not much incentive there
in the early stages for various spending departments to come up
with what could be slightly costly environmental measures as part
of the school building or hospital building programme, or delivery
of other services. Are you really saying that you are just going
to be making helpful suggestions rather than having a rather more
rigid set of benchmarks to assess what we would like to see, which
is an environmental benchmark included right from 6 April 1999
and running all the way through the three years, because after
three years it will be too late.
(Mr Byers) It is a question of promoting best
practice. What struck me—and I keep going back to the capital
side of discussion—but if you look at areas like hospitals
or schools, it is very much a question of spending to save. You
are perfectly right, in the short term there will be expenditure
implications. That is always the case with capital anyway. But
you do get a benefit in terms of substantial revenue savings accruing
either to the individual school or to the hospital. We have to
convince—and maybe this is a job for the Treasury in terms
of best practice and value for money—departments that in
fact if they look at energy efficiency, then the revenue savings
they make will, in the long run, be worth the capital costs in
the short term. I certainly know within the work I did in the
Education Department, we had a relatively small project which
spent a few millions of pounds and we got something like 2 to
5 million in revenue savings a year. Very quickly the 13 million
which we spent was repaid and so you had energy efficiency, a
far better working environment, and you also had the money repaid
over effectively an eight-year period. We need to have that as
illustrations of good practice, to ensure that people will see
that there is no conflict actually between something which is
environmentally friendly, which saves energy, and the initial
costs, because in the long run you actually benefit from it financially
as well.
36. We will come on to energy efficiency.
Could the energy savings be clobbered by an energy tax downstream
as well, so it may be a nil gain for some?
(Mr Byers) That is a massive economic argument!
37. Touching on that subject, which is getting
to the area of Climate Change and very ambitious targets which
the Government has set itself, all the time you have been talking
about target review yourself, and things that you want to do,
so how did you consider the Climate Change programme in looking
at the Comprehensive Spending Review? Did you consider setting
aside any resources to deal specifically with the Climate Change
programme?
(Mr Byers) When the Committee has a chance to
see the DETR Public Service Agreements they will see the issues
which are being addressed there. Certainly in terms of the capital
that is being made available and the way in which it is being
implemented in practice, many decisions are being made which take
into account the wider objectives and the targets which are being
set by the Government in relation to Climate Change.
Mr Baker
38. Minister, you mentioned value for money.
Traditionally there has been a formula for working out value for
money for individual projects. How does the Treasury now take
account of externalities—that is to say, environmental impact,
benefits or disbenefits, which are less easy to measure—when
working out value for money?
(Mr Byers) They do, but it is one of those difficult
areas where we have to achieve value for money. That is very important
in terms of the role of the Treasury, but we have a far more flexible
approach than perhaps many people realise. We did publish what
we call the Green Book, as it happens, in the summer of last year,
which was `Appraisal and Evaluation within Central Government'.
We say there that it is very important, in terms of determining
value for money, that there are costs and benefits which cannot
be valued in monetary terms. That then does allow people to take
into account the wider issues which do not have a pound sign upon
them, so it can be a factor which is taken into account.
39. We were promised a Green Book for the
Budget, as a matter of fact, but that did not appear. In the light
of environmental necessities and sustainable development which
you are committed to, may I ask whether you believe GNP is an
appropriate measure to apply now when working out the value of
particular measures.
(Mr Byers) The difficulty we have is that any
fundamental change is always regarded as an attempt to change
the goal posts and fiddle the figures, so we will retain the existing
process and existing measures.
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